With a plethora of options when it comes to the exchange traded fund (ETF) market, a number of institutional investors are turning to thematic-based funds for opportunity, according to a Brown Brothers Harriman & Co (BBH) survey.
The survey included almost 400 institutional investors, fund managers, and financial advisors from all across the globe. Survey results showed that respondents were planning to allocate 11%-20% of capital to thematic ETFs within the next five years.
In terms of popularity, one of the growing niches continues to be environmental, social, and governance (ESG) investing. The investment bank found that 85% of survey respondents wanted to focus more on funds that concentrate on climate change and renewable energy.
“With allocations rising across active, thematic and ESG strategies globally, it’s evident that the depth of choice in the market continues to provide new portfolio opportunities for investors of all types,” said Shawn McNinch, global head of ETF services at BBH.
“While the mutual fund market asset base is still considerably larger than ETFs, the difference narrows each year and likely will continue to do so, especially as ETF flows remain strong, mutual fund to ETF conversions gain momentum and global retail markets grow,” added McNinch.
A Macro Thematic Option
Not sure where to start when it comes to thematic investing? The Global X Thematic Growth ETF (GXTG) takes a macro perspective by providing investment results that correspond generally to the price and yield performance of the Solactive Thematic Growth Index. The underlying index seeks to provide broad exposure to thematic growth strategies using a portfolio of ETFs.
Overall, GXTG gives investors:
- A multi-theme solution: In a single trade, GXTG delivers access to multiple disruptive macro-trends arising from technological advancements, changing demographics and consumer preferences, or evolving needs for infrastructure and other finite resources.
- High growth potential: The fund invests in a basket of individual thematic ETFs that exhibit high long-term growth potential.
- A core building block: GXTG is designed to be a core building block for growth-oriented portfolios, offering broad thematic exposure at a 0.50% total expense ratio.
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